Thailand to comply with the principles of free trade economic system. However, government also monitor the prices of rice and petrol. Thailand is a particularly agricultural community that offers many of the world rice yields. Although rice remains the most important, Thailand is the production of sugar cane, maize, rubber, cassava, litchi, pineapples, peanuts, orchids, soya, tobacco, mango, cotton seed oil, oil, and durian for export as well as tin mining, iron, gold, tin, coal, tungsten, and valuables stones.
Thailand economy in the 1980s continues to function much in the center of the open market that has traditionally characterized it. This is still capitalist in orientation, most operated by the private sector with infrastructure support provided by the government, which has several investments in production and trade through a limited number of state-owned companies. Commitment to the economic system in general, there appears - there are many of Thai government's post-World War II years to organize a dynamic change.
Between 1960 and 1970, Thailand was among the developing countries of the fastest growing and most successful in the world. A rapid growth in production, along with progress in reducing poverty, it is very impressive, especially in the 1970s. In the early 1980s, however, Thailand's economic performance has slowed down, partly due to a result of the recession in the world. Although the annual growth rate remained better than the average for middle-income countries, the previous expectations have still could not been met. The aim of the Fifth Economic Development Plan between 1982 until 1986 has not been reached, and the last serious macroeconomic imbalances happened.
Government seeking a balanced economic growth and closing in the people income gap, along with increased distribution of social services that are not fair. Social and economic trends, including increasing urbanization, expansion of industrial activity at a faster pace than agriculture, and income growth in the service industry. This trend, usually related with modernization, the government developed a problem with trying to overcome. Bangkok continues to face a serious housing shortage and heavy pressure on basic services like water shortage, garbage, energy, and transport facilities. Although agriculture has become the most important economic activities of countries with a lot of people living in rural areas, the planted area cannot be increased. On the other hand, predicted that any increase in income must be earned through higher productivity of labor and land are being used and by the development and diversification of industrial production. Therefore, the government introduces the companies of agricultural products, mechanical and electronic equipment, and chemicals that have versatile-skilled labor and can be used for exportation.
Due to the investment from other countries and foreign trade in is a stressed part of the economy, outside conditions would influence the performance of the economy. Thailand harvest exceeds domestic consumption, which allows countries to export large amounts of food every year. The main agricultural exports are rice, tapioca products, rubber, corn, and sugar and the keys in exportation of non-agricultural include textile, electronics, and tin. Import covers at least half of the Thailand’s consumption of national oil. Even though they are a member of (ASEAN) by having an arrangement in preferential trade, the major trading partners are United States, Japan, Australia and the countries from the European Economic Community.
Long-term prospects depend on the impact of international economic conditions on the economy of Thailand. In the late 1970s and early 1980s, the rise in interest rates, declining demand and prices for Thai exports, and rising oil prices have caused a serious economic downturn. Further economic growth depends, in part, on the success of the Thai government in improving economic efficiency and increase domestic savings through the planning and development.
.Financial and Economic Development of Thailand
Between 1960s and 1970s, the abundant resources in the country's environmental, economic management of active and competitive private sector, and being cautious and pragmatic approach resulted in the emergence of one of the most successful economies and fastest growing among all developing countries. During 1960s and 1970s, an average annual growth of the country's gross domestic product (GDP) was approximately 8.4 percent, compared to 5.8 percent for all middle-income, oil importing countries. Between 1970 and 1980, GDP growth was 7.2 percent, compared with 5.6 percent for middle-income countries, oil imports. Slowing world by the late 1970s was mainly due to higher oil prices. Thailand's GDP in 1982 is of U.S. $ 36.7 billion. This was later increased to U.S. $ 42 billion in 1985. The projected level of GDP growth in the early 1980s was around 4.3 percent due to decreased demand and prices for Thai exports despite oil price decline. It is clear that in 1980 Thailand has been losing their momentum, the Fifth Economic Development Plan targets are not met due to serious macroeconomic imbalances, such as drop in savings and investment levels, increasing the budget deficit and increasing debt and debt-servicing obligations. Thailand will rely on the Sixth Plan for Economic Development (1987-1991) to regain its momentum of success.
In the 1970s and the 1980s, total investment calculated in an average of 25.2 per cent of GDP, compared with 24.7 percent in the mid-1980s. This proportion is among the lowest levels of investment in Southeast Asia. National savings rate has fallen even more, from an average of 22 percent in 1970 to around 17.8 percent in the mid-1980s. Therefore, the current account deficit on average 7 percent of GDP in the early 1980s was caused by a decrease in the level of savings and it is not due to the increase in the rate of investment. This imbalance is more serious than a result of increased investment can pay for increased investment to increase output and, possibly, increase savings so that debt can be explained. By saving falls, foreign loans are used not to increase investment, but only to fill the investment-savings gap, which is reflected in the ratio of external debt by 39 per cent of GDP and 146 percent of exports by the mid1980s. The ratio of total debt service increased from 17.3 percent in 1980 to more than 25 percent in the mid-1980s. This increase is an important factor in the government's decision making to reduce the authorization for a new commitment to public debt.
Public Finance
In the mid-1980s, government revenue on average about 14 percent of GDP and the average intake of about 13 percent, saving the community after leaving the interest payment is reduced by 1 per cent of GDP. This can be categorized as low compared with an average savings of 7 per cent for low-income countries and 10 percent for upper middle-income countries.
Financing public spending gives huge imbalance because of high deficits and low public savings. Even though this is not something new, the increase in public expenditure should be offset with revenue increases. Efforts to solve the problem, and public capital expenditures annual growth rate was down from 64.7 percent in the year of 1980 to 8.5 percent in 1982 and 7.4 percent in the mid-1980s. The problem remains serious, but because of political reluctance to raise people's income to the extent necessary. Furthermore, the federal government is only able to finance current public expenditure with income. Almost all capital expenditure, which averages about 3.5 percent of GDP in the mid-1980s, financed with borrowed funds, and often even a few current production is financed with borrowed funds, thus increasing the debt-servicing burden.
Total income on average about 13 percent of GDP in 1970 and remained in an equal rate in the mid-1980s. Given the disappointing earnings, a new tax package instituted in between 1984 to 1985 to increase revenues, including increased tax rates on interest income from 10 percent to 12.5 percent, decline in standard deductible for the self, the introduction of an estate tax, elimination of special rates for companies listed on the stock exchange, the elimination of tax exemptions for selected SOEs, the release of an efficient and business tax cuts and other measures. Income gains are, however, offset some of the measures to simplify the tax system and the personal. No attempt has been made to reduce exemptions and evasions of law illegal. The effect of net income was mainly because it ignored packages.
Experts have concluded that a broader tax base, less complex tax structure and lower tax rates should be considered in tax reform. In addition, contributions and taxes paid by state-owned companies should be improved because of the dropped from 41 per cent of profits at the end of 1970 compared to 23 percent in the mid 1980s.
Finance Department asked companies to make specific improvements in their financial circumstances as a condition to obtain security for the loan. These measures include funding 25 percent of new investments from its own resources of the company , forwarding at least 30 percent of their profits to the treasury, the privatization of commercial companies, introduced a system-design companies, and block the debt financing. Such actions do not lessen the burden on the state budget, and capital expenditures are financed by the government has stayed the same at an annual average of 3.5 percent of GDP in 1970 and the mid-1980s. That's important, however, that their performance improved, with savings rising from 0.2 percent of GDP over the period of the Fourth Economic Development Plan (1977-1981) to 1.4 percent of GDP in the mid-1980s.
With about 68 state-owned companies, Thailand has been less than average in the countries of Southeast Asia, such as the Philippines, with 264. However, the government is very concerned with their performance. The larger parts in terms of assets are in public, transport and communications utilities, financial institutions, and oil. The smaller parts the area of manufacturing, agriculture, commerce, and services. These companies do not represent the country at all levels of public ownership in the economy, in the mid-1980s, the government received a 75 percent share of the 24 troubled finance companies in order to save them from bankruptcy. In addition, the Finance Department has a minority stake in the eighty-eight other private companies. All SOEs attached to the service of parents or the Office of the Prime Minister, and there are five core board and two committees to oversee their activities. There are experts who suggest that, in order to maximize the efficiency of the country, the company should be more decentralized and gives some exposure towards free market competition.
The Thailand government had spent about 16 Billion of USD over the period of 1982-1985. In exact figures, this represents an improve 52 % of public spending over the period of 1977-1981, the 4th plan period. Due to the increasing percentage in the budget is reserved for recurrent obligations, less funds available for capital investment. Close to 70 percent of production is currently used for wages, salaries and interest costs. Government spending in energy, transportation, and communication have taken almost 64 percent of the total capital expenditure of the mid-1980s. Agriculture had about 15 percent of the total public capital expenditures, and the industry fell from 1.3 percent to 0.9 percent between the late 1970s and the mid-1980s. Education, health, and welfare, together continue to receive about 12 percent over the same period.
Monetary Policies
In a traditionally passive monetary policy, it controls the level of credit is the primary tool for helping growth, holding on to price stability, and monitor the balance of payments. Interest rates are allowed to adjust the rate of credit extension and are influenced by the international economy as a result of the Thailand Open economy. Fewer returns will prevent personal savings and boosts demand for goods clients.
Domestic prices are also largely monitored by world price movements as a result of open economies and the national minimum domestic price controls. Even higher oil prices in early 1970 caused inflation to increase from 4.8 percent in 1972 to 24.3 percent in 1974. Slowdown in world prices in the early 1980s caused domestic inflation declined from 13 percent in 1981 to 5 percent in 1982. Measuring the price index, with 1972 as base 100, lower prices for agricultural products, went from 130.2 in 1973 to 227.7 in 1983 compared with 115.7 to 276.3 for non-agricultural products. The highest increase of agricultural goods was from timber products, which grew from 122.9 to 403.2 for the same period. Between non-agricultural goods, mining and quarrying pointed the highest incline. CPI, with 1976 as base 100, showing the highest increase in prices of transport to 231.2 in 1982, while the rest of the basket making has increased around 180 between the year 1976 and 1982. Bangkok metropolitan area had the highest increase with 194 in 1983, compared with 188.4 for the Northeast region, 181.6 for the center, 180 to the North, and 178.4 for the South.
Wages and Employment
The average yearly rate of job growth in the year of 1970 was 2.7 %, compared with 2.9 % growth in employment caused by increasing population growth in the 1950s and the 1960s. From there, unemployment unfortunately reached 1.7 million in 1985, in connection with the unemployment rate around 6.3 %. Agriculture is a large company with around 69 % of total employment in the mid-1980s, down from 84% in 1960. During the year of 1970 and 1983, manufacturing increased share of the total work force that works from 4.1% to 7.4 %. Trade rose from 1.6 % to 8.7 %, and services from 7 % to 10 % in the same period.
Work force has undergone some structural changes in terms of age and gender. The fastest growing age group in the 1960s was between eleven to fourteen years old. During 1980s, the group of the age dropped as a result of the reducing birth rate in the early 1970s and increased school enrolment of primary and secondary. In the mid-1980s, the fastest growing group in the labor force aged between twenty and thirty, with the increased participation of women. The group of employed women increased from 66 percent in 1971 to around 70 percent in the mid-1980s. The highest female employment in the trade with 54 per cent in 1979, followed by 50 percent in agriculture, 43 percent of the industry, and 36 percent in services.
In the case of regional distribution, the North had the lowest levels of employment growth, to 3 percent between 1971 and 1985, followed by the Northeast, with 3.3 per cent as a result of limited employment opportunities and migration. Bangkok has the highest employment growth of 6.9 percent. Local employment growth in part depends on the level of education. A higher number increase of new immigrants in the work force have received higher education. In 1971 the percentage of the total workforce had basic education is 90.2. This figure fall to 72.6 percent in 1985. For those with lower secondary education and above, the share ross from 4.8 percent to 10.4 percent during the same period. Percentage of labor force with vocational training went up from 1.9 percent to 10.4 percent between 1971 and 1985. However, the unemployment in Thailand for those with college or vocational education rose from 8.4 to 9 percent in the mid-1980s, mainly due to increases average 13.7 percent in the educated work force between 1977 and 1985.
